Paper 2 · June 2018 · Process Costing

In Process I of Shaba Limited, 5,000 litres of direct material were input and normal loss is 20% of input. The actual output from Process I for the quarter was 3,800 litres. Calculate the abnormal loss in litres.

Model answer

200

Also accepted: 200 litres

Explanation

Expected output = Input 5,000 litres − Normal loss (20% × 5,000 = 1,000 litres) = 4,000 litres. Abnormal loss = Expected output 4,000 − Actual output 3,800 = 200 litres.

Derived from ZIMSEC Accounting Paper 2, June 2018, Q3

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More questions from this paper

In Process I of Shaba Limited, direct materials were 5,000 litres at $0.50 per litre, direct labour was $800, and production overhead was charged at 200% of direct labour. Normal loss is 20% of input and any loss can be sold as scrap for $0.30 per litre. What is the cost per litre of the expected output in Process I, after deducting the scrap value of the normal loss?
In Process II of Shaba Limited, the transfer from Process I was 3,800 litres valued at $1.15 per litre. Additional direct materials were 4,000 litres at $0.80 per litre, direct labour was $1,753, and production overhead was charged at 100% of direct labour. Normal loss is 10% of input, with any loss sold as scrap for $0.70 per litre. There was no work in progress. Calculate the cost per litre (per complete unit) of Process II's expected output.
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A credit customer of James Limited was granted a monthly rebate of 5% on purchases of $800. Calculate the amount of the rebate.
Which of the following is a genuine benefit of preparing a sales ledger control account and a purchases ledger control account?

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